Gold & Silver Looking To Rally As The World Moves From “Inflation Expectations” To Plain Old “Inflation”
SilverDoctors.com
May 7, 2018
SD Outlook: It used to be two words, but now it’s just one – Inflation. That’s the party that’s getting started and gold & silver won’t be left out…
On Wednesday we get PPI data and on Thursday we get CPI data.
PPI is the Producers Price Index. That is the change in price of what it costs to produce goods and services. Buying aluminum and turning it into cans would be a good example of the PPI, seeing as how the whole “trade wars” mantra is a hot topic right now, even if so far it has been nothing but talk. The point is if the cost of raw aluminum goes up, then the cost to the producer in making those cans goes up too.
CPI data is the Consumer Price Index. That is the change in price of the good and services we pay as the consumer. In our aluminum example, we don’t particularly care about the cost of aluminum. What we care about is how much a 12 pack of Coca-Cola costs. In other words, the CPI is what we pay for finished goods and services.
Besides, there’s more than aluminum that goes into the cost of a 12 pack of Coca-Cola. There’s the cost of the sugar, the super secret formula, the caffeine, the diesel to transport it to the store, the cost of the card board, the cost of the marketing, etc.
But it all comes down to one word: Inflation.
That’s the topic.
And for the longest time, the talking heads at the Fed and the pundits on the mainstream financial outlets talk about “inflation expectations”. It’s a misleading term, because there is always inflation (as in rising prices in this discussion). I mean, the Fed’s own definition of “price stability”, which hasn’t changed since the changing of the guard to Powell, is 2% inflation per year.
Said differently, the Fed wants you to lose 2% of your purchasing power, per year, in order for prices in the nation to be considered “stable”.
But Inflation expectations is a term that is about to be quickly forgotten.
Why?
Well, it’s going to be modified to no longer include the modifier “expectations”.
That’s right.
It’ll be know as plain old “inflation”.
The Rest…HERE
